Healthcare Costs

Graph from OCED data

It is a fact that per-capita healthcare costs are rising precipitously in America as compared to other countries. In the spirit of never letting a crisis go to waste a wide range of people want to assure you that this is caused by something they already hated and can only be solved by doing something they wanted to do anyway.

When debugging a broken system the starting questions are always, "When did this start happening?" and "What changed at that time?" Nobody is asking those questions. The big three talking points are tort reform, insurance companies, and lack of competition among insurance companies. But we have had private for-profit insurance companies since 1920 with the same tort landscape and state-by-state regulations, yet our per-capita costs didn't start dramatically diverging from other first world countries until the 1980s. So there is more going on here than the usual suspects.

Direct To Consumer Drug Advertising

Only two countries in the world permit pharmaceutical companies to bypass doctors and advertise directly to patients, America and New Zealand. America only started permitting it in 1985. Shortly afterward drug expenditures in the United States started rapidly increasing from $12B a year in 1980 to $340B in 2016. In 1980 prescription drugs accounted for about 2.7% of total health spend. Today it is over 10% making pharmaceuticals a driving force behind our high costs.

Unnecessary Testing

97% of doctors admit to knowingly ordering unnecessary tests and studies suggest that we spend over $200 Billion on them every year. One hypothesis is that they do this to protect against charges of malpractice and one of the strongest arguments for tort reform is to reduce unnecesary testing (tort cost themselves are negligable). However, states like Texas that have passed draconian tort reforms have seen no bending of the cost curve in return. To quote general surgeon, Atul Gawande "It’s the scan, the test, the operation that I should have done that sticks with me—sometimes for years.". They aren't afraid of being sued. They are afraid of making a mistake that someone else has to suffer or die for. Tort reform also doesn't address the category of tests that are unnecessary because they are duplicative - another doctor already ordered that test.

Unnecesary testing isn't just a waste of money, it can also be harmful to patients. A CT scan exposes you to as much radiation as 400 chest X-rays. This is unhealthy and increases your future risk of cancer—particularly in children—so it should not be done without need. But we can not leave it to patients to protest these things. When I woke up at 2:00 am in severe pain because my appendix was about to burst I was in no position to argue with the physician in the ER who ordered a $2,100 CT scan prior to my appendectomy. Later research revealed to me that a $120 ultrasound is recommended as the first test. Ultrasounds can be inconclusive but when they do give a result it is as accurate as a CT scan. An unlucky individual will have to take the CT scan anyway, but a signifigant majority of patients can avoid both the radiation and the cost.

While I can not show that unnecessary testing as a whole has increased since the 1980s, the most expensive and frequently abused form of unnecessary testing is medical imaging. The CT scan was invented in 1972, while the MRI was invented in 1977. Both had to complete clinical trials before they could be commercialized which puts them in play in the 1980s.

Prevent duplicative testing by supporting standards for the transfer of electronic medical records.

Protect providers from administrative retaliation for not using unnecessary tests as a profit center.

Partner with nonprofits such as the Colorado Medical Society and Choosing Wisely to promote doctor and patient awareness of common tests and procedures that provide no value to the patient.

In Conclusion

I am in no way defending our current medical system. It's problems are legion. I am focusing on the problems that I can do something about at the state level. And I'm trying to stress that there is more than one problem here. UHC nations don't just outperform us because they got rid of insurance companies. They outperform us because they use the power of the state to fix all the other problems. Once a government steps up and takes responsibility for public health it outperforms private companies because governments have more powers to control costs than private companies do. Horizon can't end direct to consumer prescription advertising. A government can. Kaiser can't tell drug companies that if they want to sell in the US they have to sell for the following prices. A government can. Aetna can't reduce the cost of medical degrees or increase the supply of doctors. A government can. Cygna can't force every hospital to use the same format for patient records so they can be easily exchanged between systems to prevent duplicate testing. But we did that - and its a part of the ACA that even Ken Buck admitted is good and should be kept. Horizon can't design walkable cities or zone for parks to encourage people to exercise more. A government can. And so on.

There are many fronts to fight this battle on. I choose to focus my attention on the ones that are lightly defended.